ORA-25426: remote instance does not support shared dblinks
Cause : A shared dblink is being used to connect to a remote instance that does not support this feature because it is an older version.
Action - How to fix it : DBA Scripts :: www.high-oracle.com/scripts
Use a normal dblink if you need to connect to this instance.
Well, the reason for above error is that i have taken the above script from a 11g database and running it on 10g database. 11g has bring some changes in password management. Below code is executed on 11g and user created successfully, which is expected result.